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EMERGING MARKETS-Softer dollar, firmer commodities boost Latam FX

* Brazil producer prices, federal public debt fall in August * Argentina's poverty rate falls in H1 2022 * Mexico interest rate decision awaited on Thursday (Updates prices, comment) By Bansari Mayur Kamdar and Amruta Khandekar Sept 28 (Reuters) - The Chilean peso rose nearly 3% on Wednesday, leading sharp gains among Latin American currencies, as commodity prices firmed with the dollar pulling back from a two-decade peak. The dollar index fell from a fresh 20-year high touched earlier on Wednesday while the sterling gained ground after the Bank of England said it would step in to calm distressed bond markets. Latam currencies gained 0.6%, with many touching session highs and outperforming emerging market (EM) peers that have been hurt by a risk-off sentiment this year amid rising interest rates and growing recession concerns. With the dollar weakness propping up crude and metal prices, top copper producer Chile's peso was on course for its biggest one-day percentage gain in over two months. Oil exporter Mexico's peso rose 1.1% while the Colombian peso rose 1.5%. The Brazilian real was up nearly 0.7%. Data showed the country's producer prices eased last month while federal public debt fell 0.4% in August from the month before. The real has advanced 4% so far this year despite ongoing volatility ahead of October elections. Former Brazilian President Luiz Inacio Lula da Silva has widened his lead over incumbent Jair Bolsonaro to 13 percentage points, a poll showed. "Right now the market is priced for a moderate Lula, who has moved more to the center. If Lula were to win, but also shift more radically to the left, that would be a negative surprise," said Sarah Glendon, senior EM fixed income analyst at Columbia Threadneedle. Meanwhile, Latam stocks rose 1.1%, with Argentina's Merval index up 1.5%. Moody's affirmed Argentina's Ca ratings, while the country's poverty rate fell to 36.5% in the first half of 2022 from 37.3% in the second half of 2021, the government's INDEC statistics agency said on Wednesday. Investors on Thursday will focus on Mexico's monetary policy decision, where the central bank is seen raising its key interest rate to a record 9.25%. "I don't think that Mexico is close to the end of their hiking cycle. They'll likely move in lockstep with the Fed for the time being," Glendon said. Elsewhere, Lebanon plans to slash its official exchange rate, replacing the 1,507 per dollar rate adopted 25 years ago with a rate of 15,000 in a step towards unifying numerous exchange rates, the finance minister told Reuters on Wednesday. Key Latin American stock indexes and currencies at 1915 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 880.14 -1.32 MSCI LatAm 2068.72 1.15 Brazil Bovespa 108591.44 0.2 Mexico IPC 45589.66 1.3 Chile IPSA 5099.70 -1.56 Argentina MerVal 137699.94 1.644 Colombia COLCAP 1134.80 0.98 Currencies Latest Daily % change Brazil real 5.3439 0.61 Mexico peso 20.1252 1.16 Chile peso 955.1 2.94 Colombia peso 4484.13 1.43 Peru sol 3.9323 0.08 Argentina peso 146.8600 -0.20 (interbank) Argentina peso 286 1.40 (parallel) (Reporting by Bansari Mayur Kamdar in Bengaluru; editing by Jonathan Oatis)